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ONE PERSON COMPANY (OPC)

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One Person Company (OPC)

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After ‘The Companies Act’ in 2013, One Person Company concept was introduced thus revolutionizing the corporate laws in India. Being the sole owner of the company and its only shareholder is called the OPC. Because of these regulations, the demerits of Sole proprietorships were removed to a great extent.

The following are the benefits of OPC:

  • Succession: The stakeholder of the company can provide a nominee for its succession over his death or if he steps down or can no longer run it.
  • Simple to Get Loan from Banks: One Person Company gives access to easy credit facilities from banks and financial institutions.
  • Annual return filing: It is not mandatory for the director of the company to hire a secretory for annual return filing making the process easy.
  • No prerequisite to holding annual or Extra-Ordinary General Meetings.
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Frequently Asked Question

Can an Indian citizen who is living abroad allowed forming One Person Company?

No, as per the Act, Only Indian born citizens can form a One Person Company. Non-resident Indians or individuals who do not reside in India for over 182 days cannot incorporate an OPC.

Is Foreign Direct Investment allowed for One Person Company?

No, FDI is not allowed for One Person Company, if it is, then it will lose its One Person Company status.

What if, a nominee of one OPC becomes nominee of another OPC?

As per the Act, Nominee of one OPC, cannot be a nominee of another OPC. In this event, the Nominee has to withdraw his membership from either of the OPCs within one hundred and eighty days.

What if, if the turnover of the company exceeds Rs.2 Crores?

As per the Act, the average annual turnover during the relevant period should not exceed Rs.2 Crores. If it exceeds, then the company automatically get converted to a Private Limited Company.

Can OPC become a member of another private Limited company?

The Act has not made any restriction for a One Person Company to become a member of another Private Limited Company.

Is it mandatory by law to get the signature of a Company Secretary on the annual return of an OPC?

It is not mandatory to appoint a Company Secretary in OPC and hence the annual return of OPC companies can be signed by the Director.

Whether an OPC can be converted to a Public Limited Company and vice versa?

A One person company can be converted to a Public Limited Company; however a public limited company cannot be converted to an OPC

Whether a Non-Banking Financial Investment Company can be formed as a One Person Company.?

As per the provisions of the Act, The OPC cannot carry business of Non-Banking Financial Investment activity including investment in security of any corporate.